Author Topic: Can't give the house away - reverse mortgage  (Read 1903 times)

rxmurphy

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Can't give the house away - reverse mortgage
« on: February 27, 2017, 03:26:23 PM »
My mom is in a reverse mortgage for >11 years. Now has gone into nursing home. Owes more than house is worth. Non-recourse loan. Family does not want house, mortgage served its purpose, gave Mom some money to live on. We tried to do a deed-in-lieu first, bank denied (itís a land lease property). Tried short sale, got offer for $69.9K which is really the market market value (Pinellas county, FL), denied, they appraised at 111K. We rebutted that with our realtor and 4 more realistic comps around 70K, denied. They asked if buyer would increase offer to make up difference, they withdrew offer. We do not want house or any equity here, just to give up the home. Don't want to walk away but see no other choice. HOA fees are taking what little she has left.

Any options besides walking away? The issue is the "what the house is worth" question. Bank says X, market says Y. Thanks

Mola

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Re: Can't give the house away - reverse mortgage
« Reply #1 on: March 01, 2017, 01:46:53 PM »
Find a "We Buy Houses" sign and call them or search "We Buy Houses <my city>". The good ones on the end of that line are problem solvers. There are a lot of ways to get out of a house and get some money and the people who do it for a living can be pretty crafty and help you out.

GizmoTX

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Re: Can't give the house away - reverse mortgage
« Reply #2 on: March 01, 2017, 03:25:10 PM »
If I'm not mistaken, the reverse mortgage holder owns the house unless you can pay back what was disbursed by selling it for more. Also, any vacating of the house sets the repayment timer off, & it can't be rented. Since the market value appears to be less than the repayment amount, it seems that your only choice is to walk away. The RM did serve its purpose: your mom realized more money than the sale of the house would bring & she was able to live in it for 11 years.

Mola

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Re: Can't give the house away - reverse mortgage
« Reply #3 on: March 01, 2017, 04:50:00 PM »
If I'm not mistaken, the reverse mortgage holder owns the house unless you can pay back what was disbursed by selling it for more.

I don't believe so.  OP's Mom has not deceased, she still owns it. And if she was deceased the trust or executor would. Just like the bank does not own my house with a normal mortgage. Whether normal or reverse mortgage they have to foreclose in order to obtain ownership.

I would find a we buy houses person and see what options they have. But if all you really want to do is get out from under it just let them foreclose and don't bother paying HOA and such - of course I am not an attorney and you should consult one in order to determine for sure what would happen if you walked away.

braje

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Re: Can't give the house away - reverse mortgage
« Reply #4 on: March 01, 2017, 06:16:03 PM »
Mola I believe you are incorrect.  https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten
6. Will we have an estate that we can leave to heirs?

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate.  This means any remaining equity can be transferred to heirs.  No debt is passed along to the estate or heirs.

Mola

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Re: Can't give the house away - reverse mortgage
« Reply #5 on: March 01, 2017, 07:51:07 PM »
Mola I believe you are incorrect.  https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten
6. Will we have an estate that we can leave to heirs?

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate.  This means any remaining equity can be transferred to heirs.  No debt is passed along to the estate or heirs.

Yeah, im not sure how to read "No debt is passed along to the estate or heirs."

Here is another link
https://dealbook.nytimes.com/2014/03/26/pitfalls-of-reverse-mortgages-may-pass-to-borrowers-heirs/

My guess is that no debt is passed in the sense that if the inheritor is foreclosed on that their credit is not affected. But it is definitely not that when someone dies their mortgage is wiped clean. The bank can still foreclose if the loan is not paid, but no one is on the hook anymore to pay it if they dont want to.

GizmoTX

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Re: Can't give the house away - reverse mortgage
« Reply #6 on: March 01, 2017, 08:11:55 PM »
My brother's MIL had a reverse mortgage. She's still alive but has severe dementia, & could no longer be alone in her condo. That triggered the settlement phase. Fortunately it sold for more than the reverse mortgage amount, so her family could get the difference on her behalf. But, a reverse mortgage charges hefty fees & isn't the deal it's cracked up to be.

dragoncar

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Re: Can't give the house away - reverse mortgage
« Reply #7 on: March 01, 2017, 09:51:14 PM »
Does she have other assets they can go after?  If not, why not walk away?

Drifterrider

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Re: Can't give the house away - reverse mortgage
« Reply #8 on: March 02, 2017, 05:39:36 AM »
Rx,

Walk away.  You can't inherit a debt.  I'm starting to see a lot of these houses pop up for sale; having been foreclosed.

If you can't put money into your mother's pocket or yours, walk away.  Break not one sweat bead.


dragoncar

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Re: Can't give the house away - reverse mortgage
« Reply #9 on: March 02, 2017, 12:33:59 PM »
My brother's MIL had a reverse mortgage. She's still alive but has severe dementia, & could no longer be alone in her condo. That triggered the settlement phase. Fortunately it sold for more than the reverse mortgage amount, so her family could get the difference on her behalf. But, a reverse mortgage charges hefty fees & isn't the deal it's cracked up to be.

I don't know, if she's underwater on the house it seems like she got a great deal (payments > home value).  Maybe I'm missing something here.

marty998

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Re: Can't give the house away - reverse mortgage
« Reply #10 on: March 02, 2017, 01:11:41 PM »
Rules are different here. Reverse mortgages cannot ever exceed the value of the home (the Bank loses out).

For this reason the interest rates are a little higher and the initial amount you can borrow is quite low (around 20% of the value of the home).

They real work well in realestate markets where there is consistent value appreciation in line with the interest rate - as any inheritance for heirs is not eaten away.

Try contacting your local seniors association for help in navigating the rules. They may be able to advise you or even intervene on your behalf and mediate/negotiate.

rxmurphy

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Re: Can't give the house away - reverse mortgage
« Reply #11 on: March 07, 2017, 11:45:07 AM »
Rules are different here. Reverse mortgages cannot ever exceed the value of the home (the Bank loses out).

For this reason the interest rates are a little higher and the initial amount you can borrow is quite low (around 20% of the value of the home).

They real work well in realestate markets where there is consistent value appreciation in line with the interest rate - as any inheritance for heirs is not eaten away.

Try contacting your local seniors association for help in navigating the rules. They may be able to advise you or even intervene on your behalf and mediate/negotiate.

That's my dilemma. What is the house worth today? We've listed with broker, I know the area, have received bona fide offer for 70K. Bank did appraisal, says it's worth 111K, mom has to come up with difference. She is in nursing home in another state with little (not enough for bank) assets that she needs to live on.

Also, reverse mortgages tack on a hefty fee each month that goes into a HUD insurance fund to protect bank, so they really never lose.

GizmoTX

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Re: Can't give the house away - reverse mortgage
« Reply #12 on: March 07, 2017, 03:13:42 PM »
Unless you can get an offer for more than $111, you have no choice but to walk away. I don't see the dilemma.

ShoulderThingThatGoesUp

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Re: Can't give the house away - reverse mortgage
« Reply #13 on: March 10, 2017, 05:01:06 AM »
Why did the back reject the DILF?

rxmurphy

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Re: Can't give the house away - reverse mortgage
« Reply #14 on: March 14, 2017, 05:33:57 AM »
Why did the back reject the DILF?
The condo is a "leased land" property, which I just found out. Thought that was just for mobile homes, but apparently fairly common in FL.